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Key Players in Indian Construction Industry

Private players
EPC Contracts Infrastructure development companies Real estate developers

Mega Projects in India


Construction Industry and National Economy

Second largest economic activity Influence of industry spans across several subsectors of economy t f Main characteristic feature of construction industry
Mix of organized and unorganized players in all sub sectors right from construction workers to Supervisors, Contractors and material manufactures / suppliers etc.

Investment in Construction Industry

Amount (in multiples of Rs.100 Crores) 1998 1999 2000 2001 Residential Construction 43 46 65 75 47 49 85 100 90 95 150 175 Non-residential Construction 56 58 55 60 104 107 95 110 160 165 150 170 g g Civil Engineering Construction 1350 1480 1690 1900 500 530 640 755 1850 2010 2330 2655 2002 77 103 180 65 120 185 2155 880 3035

Public Private Total Public Private Total Public Private Total T t l


Structure of Construction Industry Contd.

Business organisations
Engaged in direct construction Large corporates Medium size companies Small construction firms (urorganised)

Distribution of contractors by employment size y p y

Structure of Construction Industry

Average stratified employment quantum Status of HRD
Engineering/Graduate level Sub-graduate level

Unorganised g
Supervisory Workers/advisors

Construction Industry and Economic Development

Backward linkages Forward linkages

Backward Linkages
Backward linkages industries g
Building materials Components

Expansion of construction industry can simulate expansion of these industries Significant impact of backward linkages
Unskilled labour-intensive domestic resources

Value added through backward linkages can account for a considerable proportion of GDP
Value added through backward linkages could be up g g p to 55% of the value of construction purchases of materials and services from other industries

Backward Linkages - Contd

Magnitude of employment
1.2 million citizens per year (organised) 30 million (including unorganised)

Major employment generator

It absorbs rural /seasonal labour It absorbs unskilled workers (in addition to semisemi skilled and some skilled) It permits large scale participation of women workers It supplements the workers seasonal income from farming. farming


Backward Linkages Contd.

Startling trend


Backward Linkages Contd.

Building materials manufacturing industry g g y
Cement Steel Bricks/tiles Sand/aggregates Fixtures/fittings Paints/Chemicals Construction equipment Petrol/other petroleum products Timber Mineral products Mi l d t Aluminum, glass & plastics

Backward Linkages Contd.

Cement and steel industries has strong linkages with construction 100% of cement production i consumed i f t d ti is d in construction 60-65% of steel production goes to construction industry


Construction Cost Components


Forward Linkages
Forward linkages of construction with other sectors
Infrastructure Housing and other assets building activities

Proportion of project cost towards construction , p j , g cost, infrastructure projects like roads, housing etc


Forward Linkages Contd.

Construction intensity


Forward Linkages Contd.

Linkages of construction industry with other sectors
Linkages less extensive when backward linkages M Magnitude of li k it d f linkage i significant is i ifi t compared with

Demand for construction outputs is derived demand from all the other sectors of the economy

Impacts of forward linkages on the economy

Reduction in costs of intermediate inputs from infrastructure services Increase in productivity of other factors of production


Forward Linkages Contd.

Availability of infrastructure services
Profitability of production, levels of returns, output, income and employment of other sectors
Supply of roads & electricity can have a positive effect on aggregate agricultural output & growth of farm investments gg g g p g

Enhance international competitiveness

Unreliable delivery of infrastructure services & lack of access to infrastructure services

Multiple economic costs
Direct costs of production delay Loss of perishable raw materials Costs of under-utilisation of productive capacity

Indian Construction I d t M j I di C t ti Industry Major Issues


Investment on R&D in Construction Technologies


Major Issues in Indian Construction Industry